OBAMA ECONOMIC POLICY: Pouring Dirt On Dirt

Not too long ago, there was a United States president whose policies supercharged our economy and led to a prolonged period of job growth, massive stock market gains, and overall economic prosperity. This president slashed the capital gains taxes (thus providing more incentive for Americans to invest) and signed sweeping welfare reform into law, forcing many of the idle to enter the workforce for the first time, instead of allowing them to continue to be a severe economic burden to our society and the working taxpayers.

Most of you, without even thinking, assume I am speaking of Ronald Reagan. However, the president I just described, believe it or not, was BILL CLINTON. Despite being staunchly liberal on social issues, and despite his embarassing moral failures, he fortunately strayed far from the liberal mainstream on fiscal and economic issues, instead opting to expand even further the policies of the Reagan years that may very well have saved our economy from complete collapse. People's eyes started popping out of their heads when Clinton, a DEMOCRAT, declared that, "the era of big government is over."

It was the policies of the Reagan administration that got America back on the right track, and brought great prosperity to people of ALL economic classes (not only the rich, as his critics contend). In fact, the poorest Americans, who had seen their incomes fall 5% in the 1970's, then saw them rise 6% in the 1980's.

Reagan ended energy price controls once and for all early in his presidency, and slashed income taxes all the way across the income scale. By the end of his eight years in the White House, Reagan had lowered interest rates, slashed inflation, cut unemployment, and boosted economic growth in a way that no one thought possible. In fact, many of today's great companies came into existence during the "boom" years of the 1980's.

In fact, the plunge in interest rates during the 1980's is especially remarkable. In 1981, rates had soared to 21% (talk about a credit crunch). By 1990, the rates were down to 7%. This stood in complete contradiction to claims by the pseudo-intellectual "elite" that growing budget deficits in the 80's would cause interest rates to skyrocket.

Under President Bush the first, the U.S. slid into a nasty recession, which ultimately doomed his chances for reelection. However, Bush left the economy in such bad shape because he strayed away from the fiscal policies that his predecessor had put into place. In addition to breaking his "read my lips" pledge for no new taxes, Bush's administration presided over a record rise in government regulation.

The most disastrous example was the Financial Institions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. The intent of this legislation was to save the Savings & Loan industry from collapse. However, it was FIRREA that ultimately doomed the S & L's by requiring them to take HUGE writedowns on certain assets on their books, most notably high-yielding corporate bonds. This caused numerous S & L's to become insolvent and ultimately fail, at a huge cost to the taxpayer, since customer deposits were FDIC insured. You can blame all the Michael Milkens and Charlie Keatings you want for the S & L collapse in the late 80's and early 90's, but it was ultimately meddlesome government regulation that led to the entire fiasco (Although for the record, I'll be the first to admit that Keating was simply a crook who looted his own customers' deposits. Miliken, on the other hand, was the government's scapegoat who in reality is one of the greatest financial innovators of all time).

In the 1990's, President Clinton got our economy back on track not through enacting liberal econmic policies, but by breaking ranks and building upon the fiscal conservatism of the Reagan years. His first Treasury Secretary was long-time Texas Senator Lloyd Bentsen (the 1988 Democratic VP candidate), a conservative Democrat who was one of the last great bastians of the once great Democratic party of FDR and Harry Truman. Clinton probably also remembered the disastrous administration of President Jimmy Carter, which proved that liberal economic policy is the LAST thing the country needs when we are already in an economically precarious situation. Believe it or not, I greatly admire Clinton for putting partisan ideology aside and focusing instead on what was best for our economy.

Originally, President Clinton broke his campaign promise of a middle-class tax cut and raised taxes by a record amount. That brought upon one of the most sluggish recoveries from economic recession in history. However, things began to change after the mid-term elections of 1994, when Clinton worked with the new GOP-led Congress to shrink the deficit. Instead of bristling at the "Contract With America" implemented by Newt Gingrich and the new Congress, Clinton appeared, at least in his actions, to embrace it! And it sure paid off! As the deficit fell, the Fed cut interest rates, causing the economy and stock market to soar.

In 1997, Clinton, in true Reagan-esque fashion, cut capital gains taxes, leading to another great economic boom and unprecedented expansion of wealth, especially to the middle class. In 1980, only 16% of the working-class owned stock. By 2000, the number was up to 52%.

Nonetheless, when George W. Bush assumed the presidency in early 2001, he inherited a recession after the Fed had started raising interest rates in 1999. In typical Fed fashion, they had taken away the punch bowl just as the party was starting to get really good. The terrorist attacks of September 11 cast an even darker cloud over the economy.

Then, in 2003, President G.W. Bush and the GOP Congress made several major tax cuts, setting off a huge surge in economic growth that of course, most of the mainstream media chose to ignore. Our newly elected president, Barack Obama, says that despite the positive effect these tax cuts had on the economy, he is gong to allow them to "sunset" and not renew them, despite the fact that our economy is now in just about the worst shape since the Great Depression. Unlike Bill Clinton, it seems that Obama cannot put the most imminently urgent needs of this nation and its people above his own personal ideology.

In fact, even thus far in his short presidency, Obama has presided over the greatest EXPANSION of government in history. So far, all of the supposed economic "stimulus" (mostly earmarks pandering to various special interest groups that will only stimulate the political careers of certain members of Congress) has added up to ONE-THIRD of total national output, and will probably continue to grow.

The propoed new taxes and regulations coming from this administration and the Democratic-led Congress will bring a virtually unprecedented amount of government meddling into our private lives and private businesses. There will be sweeping new taxes, on EVERYONE. Even if you get 50 bucks more in your paycheck because of a temporary cut in income taxes, it will be more than wiped out by rises in sales tax, gasoline tax, capital gains/dividend tax, etc.

Socialism, as well as the subtle slouches towards it that we are now seeing, has never brought any hope or positive change to ANY society, only more misery, poverty, and economic malaise. This should come as no surprise, as people become more hopelessly dependent on a bloated and incompetent federal government, hoping it can at least provide the bare minimum. But what about those living in poverty who want a tad more than that, like the opportunity to move out of poverty for good (as many did in the 80's and 90's)? I'm afraid those folks are out of luck, since in order for liberal economic policy to survive, people need to be kept in poverty and dependent on the government for handout, after handout, after handout, etc. etc. etc. After all, if everyone became successful and econocally prosperous due to the truly American values of hard work, independence, and freedom from the bureaucratic machine, such quasi-socialist ideas would be dumped on the ash heap where they rightfully belong.

A few weeks ago, infamous liberal pundit Bill Maher was interviewed by Larry King about the current economic crisis. Although Maher is quite intelligent, entertaining, and no doubt funny as hell, he is no doubt miguided on several issues. In the interview, he attempted to discredit Republicans by touting how Bill Clinton was our only recent president who left the economy in better shape than when he took office. Once again though, this hardly proves that liberal economic policy is the least bit effective; in fact, it demonstrates precisely the opposite. Clinton indeed did leave our economy in good shape, but it was becase rather than shun Reagan-era policies, he in many ways expanded these policies even further with the help of a Republcan-controlled Congress, after the first President Bush had unfortunately strayed away from them.

As for the Obama administration and our present Democratic-controlled Congress, all they have done thus far is pour more dirt on dirt, apparently not having learned the difficult lessons of the 70's. The problem is that eventually, the dirt pile gets so high that people start choking on it. Perhaps some already have . . .

Casey